Every startup has a story. Every entrepreneur has faced sleepless nights and tough decisions. While every startup is different, they all share a lot of similarities. To celebrate this, we found one entrepreneur to follow to see how a year can shape a business and a person.
Hey! I’m nick.
I’m the founder of a company called Harvest Profit, Inc.
We are a small (currently 5 full-time and 3 part-time employees), but scrappy, team that’s focused on helping farmers build more profitable businesses.
While many companies are focused on the agronomy side of the farm, we are focused on the numbers side of the farm. Specifically, we help farmers track and optimize crop-year based profitability on a field-by-field basis.
I started this business in 2015 and we brought our first paying beta customers on in mid-2016. We fully launched the product in December 2016 and currently (as of January 2019) have 355 paying customers in 27 states and 4 provinces.
I’m excited to share our journey with you this year.
In 2018, Harvest Profit went from having only 2 full-time employees to the 8 total team members mentioned above.
During most of my career, I’ve worked for myself (I was a farm consultant prior to starting Harvest Profit). Having a team under me has been a learning experience. Looking back on 2018, I feel I did a pretty good job of managing the team but there are two areas where I need to improve.
- Conducting regular check-ins to see what I/we can do to help each team member do their best work and have fun doing it. I’m too “hands-off” currently.
- I need to stop dropping “Nick Bombs.” I have no shortage of ideas and I need to make a solid effort to let the ideas simmer awhile before we start building them. Software developers need uninterrupted time to do “deep work” and I need to be aware of that.
The business grew from $283,000 in revenue in 2017 to $470,000 in 2018. I was happy with that but I think we can do much better. We have been too reliant on self-service sales.
We don’t have a sales team and rely nearly entirely on word-of-mouth, content and email marketing to generate leads for our business. Leads come into a no-strings-attached 14-day free trial where we only ask for their email address. This free trial has a terrible (in my opinion) conversion rate of approximately 2-3%.
Starting in December 2018, we began experimenting with a variety of paid marketing channels. We were making significant investments in direct mail campaigns and paid search. Our goal is to find a scalable, repeatable marketing channel.
We are going to continue this effort until at least the end of February 2019 and then measure the ROI on each of the channels. I’ll report on the success (or failure/learning) of this in the coming months.
Another important event at Harvest Profit in 2018 is that we raised $280,000 from four of our customers. We raised this investment in August via a convertible note. The plan was to use the money to make a customer success hire and to make larger investments in marketing.
We hired a local, tech-savvy farmer named Ben Longlet to serve as our Customer Support Specialist and that’s been a great hire so far. As I mentioned above, the results of our marketing efforts are unknown as of the date I’m writing this (mid-January 2019).
Somewhat related to the fundraising, I’ve been approached by a few companies in the last 18 months who’ve shown an interest in acquiring Harvest Profit. We have really only given serious consideration to one of the opportunities but we decided that it was simply too early for us to go down that path.
Furthermore, we are structuring our cash flow and ownership in a way that we will never have to sell. It’s not a priority for me and it would need to be a hell of a good opportunity for our customers and employees.
If you’re part of a successful company, some level of acquisition interest is bound to happen. I would expect us to be approached again regarding an acquisition in 2019. If so, I’ll report on it in these monthly updates and disclose what I can. I value sustainable growth focused on helping our customers vs. fundraising and building a business simply to sell it.
Finally, in wrapping up my thoughts on 2018 at Harvest Profit, I want to tell you that we are laser-focused on customer happiness. We are implementing numerous new systems and processes to ensure that our customers are getting as much value out of Harvest Profit as possible.
To measure this, we conducted a Net Promoter Score (“NPS”) survey late last summer. Our first NPS score came back at a 42, a score that is bordering on great (50) but far from world-class (70). We will be measuring this again a couple times in 2019 with the goal of having world-class levels of customer happiness.
Net Promoter Score (“NPS”)
The net promoter score is a metric, which measures a customer’s overall experience with your brand or product. They are scored with a single question survey and report that number with a number of -100 to +100. They are numerous software packages that will track NPS, including Promoter.io, Hotjar, Wootric, SMB Trust Rating, Customerville and more.
Goals For 2019
I’m going to shy away from highly-defined numeric goals with a focus on implementing systems and goals that have a positive correlation with growth in customer happiness (and revenue.) This is influenced from the book “Atomic Habits,” which is one of the best books I have read in the last couple of years.
Each month, I’m going to grade myself and the company on these goals.
- Employee Engagement: I’m quite hands off when it comes to soliciting feedback from our employees. Everyone on our team is vital to our success so I need to be better about conducting regular one-on-ones.
- Sales Activity: For the first two years of Harvest Profit’s existence, I’ve focused on putting automated marketing systems in place to onboard prospective customers and nurture them through a purchase sequence. In 2019, I’m going to engage in more personal outreach to prospects.
- Systems: There are still too many business processes that are “in my head.” I need to be diligent about documenting and systematizing these processes. The business needs to pass the, “What if Nick gets hit by a bus?” test by the end of 2019. Harvest Profit is no longer just a side project. Hundreds of customers are dependent on it in their businesses.
- Content: Our business was built on the back of providing valuable content via our blog and free email newsletter. I/we can’t forget that providing thought-provoking content is what has fueled our growth to-date. My goal is to send one email newsletter each week and post two new blog posts each month.
- Data: During the first year of Harvest Profit’s existence, there were quite a few weeks where I was personally funding $2,000-$3,000/week of software development expenses. Every new customer helped lift this burden and I was ecstatic to see every one of them come through the door! By the end of 2017, I had built a nice cash cushion that allowed me to hire Jaryd and Jake (our first two software developers). But what I failed in was not making better use of data to track our customer engagement. A handful of early customers barely used the product at all. In 2018, we built much better systems to track data related to customer engagement, product usage and marketing attribution. We have room for improvement on this front and this is a key goal for 2019.
- Fun: At the end of the day, none of us live forever. What’s the point of working hard if we aren’t having fun doing it? Historically, I’ve been good at always having fun on the job but I noticed stress building up at the end of 2018. Life is too short for unnecessary stress and I’m going to actively focus on having fun at work in 2019!
- Work/Life Balance: I love what we are doing at Harvest Profit so much that I find it hard to unplug in the evenings and on the weekends. I need to do better at “unplugging” to allow for a mental recharge and spending quality time with my wife, family and friends.
That’s all for my first post kicking off 2019. I will talk to you in early February!
Here’s what’s on my mind today:
(February 8). It’s -24 this morning! I can live anywhere with good internet, yet here I am!
Anyway, on to a report on how the last month has gone at Harvest Profit.
We had a good month in January. In 2018, January revenue made up 19 percent of our annual revenue. It was, by far, our largest revenue month. In January 2019, we exceeded our January 2018 revenue by 28 percent.
In the world of venture-capital backed startups, this would be considered a failure. Most of these companies are looking for revenue growth of 10 percent per month in the first couple years of business. This would lead to an expectation that our revenue should be up 300 percent when comparing January 2018 vs. January 2019.
A lot of ag-tech companies have chosen to raise significant amounts of venture capital. There is nothing “wrong” with venture capital funding, especially for businesses that have a proven sales model and need “fuel for the fire.”
In addition, if you’re trying to build a business with network effects (marketplaces, social networks, winner-take-all markets), capital intensity or to fund acquisitions, venture capital is often a necessity. Harvest Profit isn’t in that position, yet.
Most of our sales come from referrals, word-of-mouth or from people who have been on our email newsletter for the last year or two. We don’t have that repeatable, scalable sales model that just needs more fuel.
Speaking of that, since December 2018, we have added 1.5 new customers every calendar day. While there’s not a lot of public comparables, I feel that this uptake is in the top 10 percent of all ag-tech companies. Our focus on providing value-added content to our blog and email newsletter is really the building block of our sales.
One piece of news I wanted to share was that the Board of Directors of a very large agriculture company approved a partnership with Harvest Profit. We still need to hammer out the operational aspects of this partnership, but this could be a great opportunity for us to get our software in front of many more farmers over the next year or two. I’ll hopefully be able to shed more light on this in a future update.
Grades For January
- Employee Engagement: D I did an OK job of checking in with members on the team to see if there’s anything the company/I can do to better support them.
- Sales Activity: A I’ve taken a bit more active role in our sales process by reaching out to prospects active in our free trial. This effort has led to approximately 50 percent of our new customers.
- Systems: D I recently agreed to hire a part-time administrative assistant to help remove some less value-adding activities from my task list. I need to invest the time to make this a success and I’m not looking forward to this process.
- Content: B I built two new presentations and conducted 10+ webinars in January. These were well received from attendees but I need to focus on getting more high-quality content on our blog.
- Data: C We have recently uncovered one major marketing effort that has been a fail (it’s related to paid search advertising). Historically, we would have put the tracking in place to measure the performance of this advertising, which is a bit embarrassing but we’ve improved on this quite a bit.
- Fun: B January is one of our busiest months so it can easily be stressful but I enjoyed my more hands-on sales approach from January, as well as the progress our team is making on new software features.
- Work/Life Balance: BIn December, I had a stretch where I was really sleeping like crap. That was impacting both my work and life. It resulted in me working more than I’d like (60 or so hours/week). I read a book called “The Sleep Solution” by W. Chris Winter and it’s had a positive impact on me being more productive at work, which allows for more “unplugged” time at home.
February was a month of growth and learning at Harvest Profit.
First, let’s talk about learning. I mentioned in last month’s update that we found a marketing channel that was a loser for us. I’m going to dig into that.
If you Google the term “farm management software,” you’ll find that one of the top two or three listings is for a review site. This company posts lists of software companies along with a description and user reviews and offers sponsored posts.
Before I get into the specifics of these sponsored posts, let’s take a look at our marketing funnel.
- Prospective customers tend to find us on social media or via word of mouth (from other farmers, ag lender, grain buyers or other people they work with).
- Most will sign up for our email newsletter or a free trial.
- Our 14-day free trial gives full access to our software without any ask of a credit card or purchase commitment.
- We follow-up with an email campaign to educate them on how to start getting value out of the software.
Historically, conversion rates out of this “funnel” have been approximately 10% but our data on this is a bit cloudy as we have had people sign-up directly but also after phone outreach. This multi-channel tracking is a needed area of improvement for us.
This brings me to one of the review sites that we paid for. From September 2018 until March 2019, we spent $6,938.75 in advertising on this site and received 1,184 visits from it. That amounts to $5.86/visit.
Here are the assumptions I went into this experiment with. Normally, I would expect this type of targeted landing page visit to generate a 25% conversion rate to a free trial. To be conservative, let’s really knock this down to 12.5%. Let’s also cut our free trial-to-paid conversion rate from 10% to 5%.
Now, let’s calculate our breakeven price for a visit to our free trial landing page. We are going to target a one-year payback period assuming $1,400 of incremental gross margin.
$1,400 x 12.5% x 5% = $8.75
We could pay up to $8.75 per visit and achieve a one-year payback. If you look at our actual cost of $5.86 and compare that to our hypothetical, you might think that we found a scalable marketing channel?! Wrong!!
The free trial page converted at less than 5% and the free trial converted at 0%. There is no question that these aren’t our target customers. We had 100 new customer sign-ups from sources other than this review site while we batted a fat .000 from 1,000+ landing page visitors from it.
Additionally, we have plenty of room for improvement here as well on the conversion rate-front and that’s a core area of focus for me.
We need to get back to our core marketing activity of providing value via content and email marketing. Those who get value from our content will likely think of us first when looking for software tools.
On an unrelated topic, I had very informal discussions this month about a potential merger partner for Harvest Profit. More on that towards the back half of 2019.
Grades For February
- Employee Engagement: C Once again, I need to do a better job of checking in with our team. This is a definite weak spot of mine.
- Sales Activity: A As I mentioned above, we recently decided to aggressively throttle back our largest advertising expenses and haven’t seen it impact new customer sign-ups. That shouldn’t be surprising given the lack of sales it generated.
- Systems: C I decided to delay hiring a part-time administrative assistant. I came to the realization that billing is an area we need to better define systems/processes. We are building an internal tool to manage our billing, specifically our renewal process.
- Contents: C I updated our blog with two “new” posts but they were only recycled posts that I wrote in the past. This recycling of posts is valuable as I tend to update them when re-dating them but I still need to keep pushing out new content!
- Data: A Our recent decision to cut our largest advertising expense was a clear example of using data to empower decision making.
- Fun: B We have been able to push some new features out to our customer base and that’s always enjoyable work. We’re also working on a new development that I’ll talk about in the next couple months.
- Work/Life Balance: C I’ve started to finish up the work day a bit later than I’d like (6:30ish) but that’s partially a symptom of it being our busy time of the year. I continue to do a better job of unplugging in the evening, which is correlated with better sleep.
March was definitely a roller-coaster of a month at Harvest Profit.
First off, on a personal note, my father was in a car accident the first week of March. He broke a couple vertebrae in his back and will be in a brace for a few months. He lives alone and has been retired for 20+ years due to a construction accident. Due to that, I help him with many things and this accident will lead to a lot more help that my wife and I will have to give him.
He’s helped me a lot over the years, obviously, so now I’m just returning the favor as family should do.
On the business front, we had our best month of the year growth-wise in March. Revenue was up 84 percent vs. last year. We’ve started to implement more direct outreach to people who are in our free trial. That’s been a key contributor to our growth. We’ve realized a couple things regarding sales at Harvest Profit.
- Our price point is a bit too low to adequately incentivize partners or dealers. In addition, the product is complex enough that it’s not as “cut and dry” as other products that dealers typically sell.
- To field questions from prospects, a person really needs to understand the different ways our customers are using Harvest Profit. This expertise is hard to “grow” without in-depth use of the product.
- Our most successful customers are the ones who have stumbled upon the software, signed up for a free trial, got their data inputted and hit the ground running. Customers who have been signed up via partners/consultants have a substantially lower success rate.
Given this, we’ve been driving people towards our free trial and then reaching out to the most active users of the free trial. This outreach has increased conversions by at least 3x and, most importantly, sets the customer up for the best chance of success.
We now have two levers to focus on going forward, 1) getting more people in our free trial and 2) increasing the amount of people that actively engage with the free trial. That will be a key focus going forward.
On a less enjoyable note, I let a team member go this month.
A little over a year ago, we hired a software designer to help us design the software’s user interface as we roll out new features. He had been doing high-quality work but I’ve come to the realization that given our software development capacity, we only need 20 percent of a design resource, not 100 percent.
He was doing very good work for us. I had just given him some positive formal feedback in January so this came as a surprise to him. I feel like I dropped the ball on this one as better planning would’ve prevented it.
Looking at my goals, employee engagement has been a key goal and this is an example of that being a definite weak spot. I should’ve communicated this earlier. This was a failure on my part.
Overall, March was a month filled with highs and lows for Harvest Profit.
Grades For March
- Employee Engagement: B Following the departure of one of our team members, I had discussions with the rest of the team about why it happened and how we can prevent it from happening again.
- Sales Activity: A We had our best month in company history, even after dramatically cutting marketing spending.
- Systems: B We are making good progress on an internal billing tool that’s going to be a huge benefit for us.
- Content: C It was another slow month for generating content.
- Data: A I’m going to cheat and use last month’s update, “Our recent decision to cut our largest advertising expense was a clear example of using data to empower decision making.”
- Fun: D Letting someone go isn’t fun. Plain and simple.
- Work/Life Balance: B I’ve had to help my father quite a bit this month. I’ve visited him nearly daily, which has taken up quite a bit of my time. This isn’t sustainable over the long-run but I’m thankful to have the flexibility in my schedule to be able to focus on this.
If you didn’t know from my earlier updates Harvest Profit started as a side project for me.
It was a tool that I was “kicking around” for a long time. For the first two years of the company’s existence, I was the only one working on the project and I had a full-time job that was my priority.
While I was operating in this mode, I didn’t have time to document everything I was doing with the business. I was “shooting from the hip” in a lot of ways.
Knowing that we’ve grown into a full-time endeavor for multiple people along with being a vital tool for hundreds of farmers around North America, Harvest Profit is going to be around for awhile. With that said, as the sole founder of the business, one big priority of ours this year is putting better systems in place. Key business processes can’t simply live in my head.
One of the big processes that I’ve had complete control over is the process we go through when billing customers for their annual renewals. Our first large batch of customers came through the door in December 2016. Ninety-five percent of these customers signed up online and paid with their credit card.
But, we had a few customers that requested to pay via check. Being a small, self-funded business, I was happy to comply with that request.
Fast forward to December 2017…
We had our first sizable batch of renewal payments due that month. The problem was that we had some customers available for auto-renewal via credit card and some via a manual invoicing process. I made the choice to simply send every customer a manual invoice. Easy enough…
Fast forward again to December 2018…
Given that the majority of our customers pay for our software via credit card, we made the choice to start using the credit card auto-renewal process that 99% of SaaS (software-as-a-service) companies employ. Given that some customers are set up via manual renewal, we now had two methods of billing in our business.
Adding complexity to this process was the task of sending invoice reminders to those customers set up for manual payment but who haven’t paid in a certain number of days. Our billing had slowly grown into a rather complex process.
Given that systematizing the business is a key goal, this billing process was one that is ripe for a formal system/process being put into place.
On top of the fact that the process simply needs improvement, me spending significant amounts of time on this process is a very low ROI activity compared to product planning or marketing.
We evaluated a number of third-party tools to use for this process, but we ultimately decided to build an internal tool. Building a well-documented tool will allow anyone on our team to handle billing-related tasks and we will likely hand it off to a third-party bookkeeping service.
Here is what this tool will do for us.
- We will have customers “tagged” as either 1) auto-renew via their credit card or 2) set up for manual invoicing.
- If users are set for auto-renewal, we will automatically send them an email two days before their renewal date letting them know that we are going to be processing their renewal payment. We will then process their payment.
- If users are set up for manual renewal, we are going to take advantage of some cool automation.
- We are going to use Quickbooks Online’s API to automatically generate them an invoice. Quickbooks will then send us a PDF of this invoice.
- We are going to automatically mail out this invoice using the API of a service called Lob (lob.com). They will send out each invoice via standard mail. No one on our team will have to handle any mail or postage.
- We will send out invoice reminders via email and use Lob to send them a paper copy as well.
- We are going to include a variety of payment metrics in this tool: recurring revenue, late payments, payables aging stats, etc.
I would love to spend our time working on user-facing features but, at the end of the day, this tool is going to be an upfront investment that will allow us to maximize our future time spent helping our customers.
You’re likely thinking, “Wow, that was a detailed explanation of a problem I will never face in my [insert non-software industry] business!” And you’re right! It’s highly likely you’ll never face this exact issue in your business.
I would bet that it’s highly likely that if you’re a business owner, you’ll find yourself working on some repetitive, low-ROI tasks that you’d like to ditch. I have found it very hard to let go of these tasks.
My thought process has always been: “In less time than it would take me to train someone how to do this, I’ll just do it myself!” As our business has grown, these types of tasks can be anchors on making a stronger impact on our customer/team and, frankly, the enjoyment of being a business owner.
I’m done with shying away from making these investments in time/resources! I’m focusing more on working “on the business” and not “in (the mundane tasks) of the business.”
Grades For April
- Employee Engagement: B I’ve been doing a better job of checking in with everyone. We are also doing a better job of using a high-level project management tool (Basecamp) to track the new features we are working on.
- Sales Activity: C Sales in April were flat year-over-year. April 2018 featured poor planting weather, which led to us pushing out a limited-time promotion. We didn’t do that this year so had a harder year-over-year comparable. Overall, our year-to-date sales are up approximately 50 percent, which we’re happy with.
- Systems: A We continue to make good progress on the internal billing tool that I highlighted in this monthly update. We will likely finish version one of that tool in May and begin testing and iterating on it.
- Content: A Here’s my update from last month, “Another slow month for generating content. That is going to change in April, I guarantee it!” I did a much better job sending out content this month to our email list.
- Data: C Earlier this year, we used data to optimize our marketing spend. This isn’t a groundbreaking use of data. It’s simply a requirement. We need to keep making use of our business’ vast amount of data. We have been using software metrics to identify and reach out to users who likely need assistance using the software to its full capability.
- Fun: A April has been a good month of getting stuff done. That always makes work fun for everyone involved, as long as it’s is done in a sane manner. And it has been.
- Work/Life Balance: B In a previous update, I mentioned an accident that my father was involved in. That continues to take up quite a bit of my time. That’s what family does for each other but it’s a bit unsustainable. Thankfully, we have a good team that allows for my schedule to be flexible.
Uh oh… the roller coaster of building a software product (and a company in general) will be in full effect in this month’s update.
After reading how excited I was in April about a key piece of infrastructure that we have been building, our billing portal, that enthusiasm has come to a screeching halt.
There are a few key reasons for it.
- We make software for farmers. While it’s important to have a solid business foundation in place, this billing feature would have very little impact on our customers’ businesses and that’s what’s most important to us.
- It became clear that we were going to have to add a lot of small features to get this tool to a place where it was functioning appropriately for our business.
- I had a conversation with a fellow ag-tech founder and I mentioned some of the frustration we were seeing building out this tool. He told me that the single worst mistake they made was building out a custom billing tool. They have ripped it out and replaced with an “off-the-shelf” solution. I asked him how they handle customers who want to pay via check. He simply said they don’t handle payment by checks as it turned into a collection nightmare.
My conversation with the fellow founder regarding this essential piece of the business was eye-opening and really hit home for me. Rather than be a lemming and make a quick impulse decision, I evaluated my options for a few days. I ultimately made the decision to transition our billing to Stripe’s Billing toolset and move away from accepting payments via check.
Using an industry-standard billing tool will allow us to focus on building software for our customers. I believe that it also adds more value to our business as this will be less of a question mark if we were to ever be looked at for an acquisition.
This roller coaster of excitement and disillusionment with a key project isn’t healthy for our business and leads me to discuss how we try to prioritize work at Harvest Profit.
This is definitely a work in progress for us, but we are moving towards a system where we work in the following “cycles.”
- We maintain a backlog of feature ideas/requests.
- On a regular cadence (every six or eight weeks), we pick a “story” to build out. Most of these stories won’t be heavily spaced out ahead of time.
- We build these features on using a methodology of “fixed time, flexible scope.”
- We won’t maintain a lengthy fixed roadmap and we’ll be careful promising to customers what we build.
We are a bit of a small team to fully implement the process above but the key takeaways are that we want to be highly flexible in what we work on next.
This process also gives autonomy to the team to build out the feature the best that we, as a group, see fit. I’m a firm believer that autonomy is a key ingredient in employee happiness. Best-selling author Daniel Pink has a great TED talk on this topic that I highly recommend you listen too.
Historically, I haven’t been the best about delegating the responsibility of what we should work on but that’s a key goal of improvement today. Here’s a conversation I had today with one of our developers.
In the past, I would want to review every small change that we made to the software. But Jaryd intimately knows this feature and the scope is rather small, so I deferred to him to make the right choice.
I’m hopeful that our flexible methodology around development (why spend a ton of time on a feature spec upfront if you know that it’s going to change 90+ percent of the time?!) and me actively deferring responsibility will lead to our team really enjoying their work.
More resources on this topic are available from the team that’s built the project management software product called Basecamp and it’s a key maintainer of the software development framework that we use at Harvest Profit called Ruby on Rails.
They recently published an awesome web-based guide to how they do work. It’s a must-read resource for any manager, in my opinion. Check it out at basecamp.com/shapeup.
On the financial side of things, May is one of our slowest months. We will bring in minimal new sales this month as our customers are busy planting their crops. This is the first month of the year where our cash receipts will be less than our cash expenses. I’m not a fan of watching our cash balance drop over the summer but that’s the nature of our business.
On another note, in an earlier update I referred to a partnership deal being approved by a large ag company’s Board of Directors. Large is maybe even an understatement when describing this company. Anyway, this deal, which called for $60,000+ of annual revenue for us has fizzled. I don’t expect it to happen.
I’m actually not disappointed as I enjoy serving our 400+ customers individually and I’ve tried to avoid larger deals in the past. I don’t want to have to answer to a few large customers to the detriment of our customer base as a whole.
More to come next month on a big feature that we are launching. Thank you for following along on our journey!
Grades For May
- Employee Engagement: B I’ve been doing a better job of checking in with everyone. We are also doing a better job using Basecamp to track the new features we are working on.
- Sales Activity: DThis is hopefully our first month that will have negative year-over-year sales. Not good.
- Systems: A Although it wasn’t fun to “kill” our internal billing feature, moving to Stripe’s billing is going to be a great thing for our business going forward. Our billing and AR will be dramatically less work for us than having to manually send out invoices.
- Content: C I was out of the office for a lengthy amount of time in May. That led to me not generating as much content as last month.
- Data: CEarlier this year, we used data to optimize our marketing spend. We need to keep making use of our business’ vast amount of data. We have been using software metrics to identify and reach out to users who likely need assistance using the software to its full capability.
- Fun: B- It’s never fun back-tracking on a sizable project as we’ve done this month with the billing feature.
- Work/Life Balance: A My wife and I traveled to Greece for almost two weeks this month. I worked a couple days while we were gone but I was able to unplug and the business kept moving along without me. Our team does a good job of staying on top of customer support and that’s something we simply have to do! It was nice to see this continue smoothly with me out of the country.
In last month’s update, I mentioned a new feature that we were working on. We got this feature done exactly on time, which is a bit of a rarity in the world of software.
The feature we built allows our users to track their grain inventory positions from field to their on-farm storage and elevators. The feature allows our customers to 1) calculate their actual field yields (based on weights, not with often-miscalibrated yield monitors) and 2) track and audit the flow of commodities from “farm to sale.”
We initially started working on this feature in March 2018 and put it on pause in September 2018 as soon as we realized that it wasn’t going to be ready for last year’s row crop harvest. We made a point to release this feature well in advance of this year’s harvest and started working on it again in March of this year. It feels great to have this feature launched and it was also a learning experience for our team and myself.
I made a mistake by not breaking up this large feature into smaller, bite-sized chunks. Rather than spending nearly a year working on it, we should have split it up into three or four six-week projects.
Also, we’ve made a point of not trying to define the scope of a project in too much detail before we have time to “get our hands dirty” with the project, but this feature had enough moving parts where we should have spent more time up front defining the scope. In “Shape Up” by Basecamp, the book I mentioned in last month’s update, they call this process “shaping.”
Our grain inventory feature could’ve used more upfront planning and that’s a key emphasis for me in the back half of 2019.
Changing subjects, we were approached this month by a company that has some acquisition interest in Harvest Profit. This is the fourth time that we’ve been approached by a company that’s shown interest in acquiring our company.
At least two of the first three were framed more as acqui-hires vs. a true company acquisition. An acqui-hire is a situation where a company acquires another company with the primary goal being the acquisition of the team vs. the company as a whole. These were completely reasonable approaches as we barely had any customer traction at the time. But I wasn’t interested in simply going to work for another company. I wanted to build this business!
Fast forward to today and we are one of a small handful of ag-tech SaaS companies who have gotten real traction in the marketplace.
None of the initial interest we’ve had sent our way has gotten far enough down the path of talking “numbers” as they simply haven’t been the right fit for us at the time, the most recent one included.
Given that the employees of Harvest Profit own the vast majority of the company, we will never be forced to exit (unlike many other ag-tech companies who’ve raised significant amounts of venture capital). That doesn’t mean that we are opposed to an acquisition by any means, it just isn’t a priority for us.
With that said, if we continue to grow, I would expect that there will be some interest from time to time. Being a small business like ours, we can’t let that distract us from building the best product we can for our customers and providing great support for them.
Grades For June
- Employee Engagement: BI still need to get into a good rhythm of checking in with employees. My preference is to give our employees space to do their best work and keep updated on that using our everyday tools (Github and Basecamp, primarily). That may not be their preference though so next month, I’m going to make a point of doing an active check-in with everyone.
- Sales Activity: C Delayed planting across most of the US has made our customers considerably busier than normal. This has negatively impacted our sales for June but we don’t count on June being a high-sales month for us. We ran a promo last June, which made it a tough “comp” for us but, regardless, this was the second month in a row of lower revenue year-over-year.
- Systems: AThe new move to Stripe’s billing system appears to be the correct choice. All of our developers are now working on customer-facing features, which is ideal given that we have a lot of fun stuff we want to build that’s better for our customers.
- Content: A We built seven standalone pieces of content. When compared to other farm software companies, we are at (or very close to the top) in the quality and quantity of content we generate.
- Data: C-We need to get better at turning our data into actionable insights. We are rebuilding our sales website in July/August and that should open the door for better marketing analytics.
- Fun: A We released our largest feature ever in June on the exact date we planned for months ago. That was a very fun accomplishment for the team!
- Work/Life Balance: AI’m still spending a lot of time helping my father after he was in an accident in March. It’s a challenge to allocate the time for that while still getting all of my other obligations taken care of but that’s life and I’m getting better at it!
July was a good month for Harvest Profit!
In last month’s update, I talked about the grain inventory tracking feature we added to our software. Historically, most of our customers have used the software primarily for cost and profit tracking. The majority of this work is completed over the winter months as our customers are preparing for the upcoming growing season.
This has led to our primary sales window being December through early April. This has started to change this summer and that’s a great thing for our business.
The grain inventory feature is something a subset of our customers will use during the harvest time of the year. Given that harvest season across our customer base is centered around the months of September through December (some wheat harvest begins in July), farmers are beginning to plan for harvest right now.
This has led to them thinking about how they are going to manage their inventory for the upcoming harvest and they may be thinking, “Hey, I saw harvest Profit release a new inventory feature, I better check that out.”
That appears to have happened as our sales in July were up 87% year-over-year. This includes some one-time revenue from a course we sell, which will also impact August sales. I’ll talk more about that in next month’s update.
Changing subjects a bit here, but we continue to make progress on our longer term software roadmap. We’re starting to work on some large new integrations, which we are targeting to complete in the first half of 2020. I don’t like longer term projects like this as they feel like they drag on forever.
We’re going to break them down into more bite-sized chunks, but they will still be taking up a lot of our team’s time. And with harvest season approaching, our support and marketing will slow down. Given this, I have the capacity to start thinking about and working on new projects.
One big focus for me has been working more “on” the business vs. “in” the business. This has led me to start documenting our business’ processes. Examples include:
- 10+ steps involved with new customer onboarding.
- The process for sending out a marketing email newsletter.
- The process for updating our software’s documentation.
I want to have these processes documented and have been looking for a tool to “activate” them, assign employees to them and track their progress. There are a few tools on the market to do this but none of them are great, in my opinion.
In addition, this type of process management is what I see as an opportunity for improvement for many of the farmers I’ve worked with over the years.
With all this said, I’ve started working on a new product called Playbook. It’s a tool for helping business owners spend more time focusing on revenue-generating tasks vs. manually managing the repeatable processes involved in their businesses.
We have solid momentum with Harvest Profit right now so I need to be careful about getting distracted working on non-core activities. I view Playbook as a small bet on building a product that has more broad appeal than Harvest Profit and I’m going to engage an outsourced developer to work with me on the project to minimize distractions for our in-house team.
I try to approach things like this similar to how an investment manager approaches their portfolio of investments. I want to make small bets on new ideas to add diversification to the business as a whole. These bets can be Harvest Profit features or new standalone products.
I’ll report more on the Playbook process in the coming months but 95% of our total team energy will remain focused on the core Harvest Profit product.
Grades For July
- Employee Engagement: B It’s like Groundhog Day around here! I still need to get into a good rhythm of checking in with employees. I touched base with every team member this month as I said I would in last month’s update but I sense a COO/integrator-type role in our future.
- Sales Activity: AAs I mentioned in this month’s update, July was a good month for our team.
- Systems: B We continue to move customers onto Stripe’s subscription billing feature. Automating all of our recurring tasks is needed at Harvest Profit and the reason why I’ve started building Playbook. Getting it (or something similar) into action over the next few months will be big.
- Content: C Only one new blog post this month. Content needs to be prioritized.
- Data: A We are working on a data initiative that will be ongoing over the next few months that should really help our data insights.
- Fun: A We had a fun team outing in early-July at my lake cabin near Perham, MN. We enjoyed some golf, Zorbaz, lake time and an adult beverage or two. Good sales performance also helps morale!
- Work/Life Balance: B I’m still spending a lot of time helping my father after he was in an accident. I feel stretched a bit thin at times between work, family and friends but I’m not working much more than 40 hours/week with some extra time in the evenings, which is much more balanced than many in the world of startups.
August was another good month for Harvest Profit!
Due to a spike in sales in early August, our YTD revenue now exceeds our full-year 2018 revenue. We are running the business at approximately breakeven as we’ve invested in the team but our cash reserves are comfortable and we don’t “need” anymore hires (outside of one planned in October) over the next year.
The aforementioned spike in sales led to a total month increase of 212% vs. August 2018 but that outperformance is a bit misleading. Our sales would’ve been up approximately 100% (putting the growth in line with our July performance) but we ran an annual sale for a non-software product.
Before I talk about the product, I want to give you some history into when I started Harvest Profit.
In 2015, I started building the current version of Harvest Profit’s software product while I was doing consulting for farmers in North Dakota, Minnesota and South Dakota. I love spreadsheets and still use them every day, but they weren’t ideal for the work I was doing. I had failed in creating earlier versions of the product. The mistakes are too many to mention but they center on me not knowing anything about software development and trying to get it built as cheaply as possible.
The turning point for me getting Harvest Profit built was 1) me learning the basics of web development and 2) hiring a local firm to build the first version of the product. Josh Christy and Brian Pattison of Codelation (Brian now works at Simply Made Apps) did an amazing job of helping me build a customer-ready product in a timely fashion. Brian and I very quickly started seeing things “eye to eye” and that was a productivity game-changer.
It’s not all gumdrops and lollipops, though.
Codelation had materially higher billing rates than earlier firms I had used in my failed iterations and I was funding the development using my personal funds and InnovateND funds (thank you to the State of ND for the support!)
Even with only part-time work on the product, I was regularly seeing bills of $2,500+ per week. I got to the point where I could see the finish line for the first version but I was getting low on funds that I wanted to invest in the software.
I was driving to my office one morning and listening to a podcast when I got an idea. (I don’t remember the exact podcast but I think it was Mixergy.) They were discussing online courses and it gave me the motivation to try to sell an online farm management course.
As soon as I got to the office, I started working on a curriculum (I was supposed to call clients that day. Oops, I postponed that for a day!) I set up a sales landing page using a service called Gumroad. Gumroad allows you to hold pre-sales where people commit to buying a product without getting charged until it’s released.
By the end of the day, I had the curriculum planned and a launch date set for two months from then. I emailed a limited time offer to an email list I put together of about 800 people.
I set a goal that I would need to get $2,500 worth of pre-sales to actually build out the course (it was priced at $197 for lifetime access). When the limited-time pre-sale offer was over, I had $20,000+ of commitments to buy it. Without this funding, I wouldn’t have been able to finish the first version of Harvest Profit without having to pull in funds from a third-party of some sort.
This program through the North Dakota Dept. of Commerce is aimed at funding the entrepreneurial ecosystem in North Dakota. It provides entrepreneurs access to venture tools, resources and mentorships and offers a variety of benefits, including…
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You may be asking why I’m getting into so much detail on this story and that’s a good question. The reason is that out of all the things that went right with getting the first version built (along with many mistakes), the most impactful activity that I completed was building that initial email list of followers.
Without that, there is .00001% chance that I could have gotten that farm management course in front of as many people as I did.
That email newsletter is still a huge asset to our business. We’ve had 13,000+ sign up for it over the last three years. We “prune” it occasionally so the emails don’t get marked as spam but it still stands at 7,000+. Marketing attribution is hard, but I estimate that 80+% of all of our revenue comes from our email newsletter subscribers.
I try to send out at least one email per week to our subscribers on a topic that I feel that will be valuable to them. I have conditioned myself to always be looking for good content to share. Sending out a well thought out email is the most enjoyable work activity of the week for me. Sometimes I send out a “dud” but, nonetheless, it’s the highest ROI activity of my week.
Let’s take a look at a concrete example of that ROI.
In August, we opened our course for sale for the only time in 2019 and it generated over $40,000. That accounts for 100+% of the outperformance we experienced this month as our sale last year was in June.
This experience has opened my eyes.
We’ve tried a lot of different marketing over the last year but we’ve removed some of our focus from this email newsletter. I still send out regular emails but we haven’t focused on adding people to the list for quite some time.
Too much energy has been spent solely on having people sign up for free trials of our software. That’s going to end! We are going to show this email list the love it deserves.
I’m a huge fan of content and email marketing. Every business owner should make it a core activity in my opinion!
Next month, I’m going to talk about another core driver of recent growth at Harvest Profit and some downsides we’ve experienced along with it.
Grades For August
- Employee Engagement: B Our first employee, Jaryd Krishnan, had his two-year anniversary with Harvest Profit this month. We/I am blessed to have an awesome core team. We exceeded our course sales goal this month so we’re going to do another offsite this fall where we’ll relax and strategize on the future of Harvest Profit.
- Sales Activity: A August was one of our best months ever. No complaints here.
- Systems: AWe continue to make good progress on Playbook, our internal tool for managing repeatable processes.
- Content: D Zero new blog posts for the month. I did update four of our older posts and bumped them up in our blog history. I need to convert some of my email newsletters to blog posts as I have a lot of content sitting in those emails that’s ripe for “forever” distribution on the blog.
- Data: AWe are working on a data initiative that will be ongoing over the next few months that should really help our data insights.
- Fun: A We’ve had some good laughs around the office this month, especially on the day that our most recent course sale closed. We’re in a good rhythm for sales, support and new product development and that’s a key ingredient in overall enjoyment.
- Work/Life Balance: ANo big developments on this front. I’m not putting in any crazy hours so all is well here!
September continued to be a good month for us.
I don’t have exact numbers to report but I estimate that we’ll be up 100% year-over-year. I attribute a different cause to this month’s growth and it comes with some bumps on the road.
In a few of these updates, I’ve mentioned the grain inventory tracking feature that we launched in June. This feature includes a couple of integrations with third-party sources of data. These integrations have attracted an audience outside of our current base of prospects. This is great but it hasn’t come without growing pains.
Most modern business software tools give users the ability to connect many different software tools together. Examples are below:
- Your event tracking software will push updates to your CRM software.
- Triggers in your CRM software will initiate marketing campaigns in your marketing software.
- Payments from your payment solutions provider will advance people in your CRM pipeline.
- Plus infinitely more combinations…
In the world of modern business software, there are a few large software providers that cover many different areas of the business (eg. one Enterprise Resource Planning tool covers all of the use cases shown above) but businesses such as ours use different software tools for different areas of the business. Farmers are similar. There isn’t a standard ERP-like software tool that covers all the bases of a farm business.
Given that, there is a strong demand for integration among different software tools. To date, we have built four such integrations. The integrations are helpful to our customers but there is a lack of consistent data structures in farming and many of these systems have been set up by our users without the understanding that they will be integrating with other tools.
The main fallout for companies such as ours is that we end up having to try to diagnose issues that live in software tools that aren’t our own.
Here’s an example.
- A customer wants to transfer yield data from an agronomy tool into Harvest Profit.
- They quickly set up an integration where we match fields in Harvest Profit to the fields they have in their agronomy tool.
- They start importing their agronomy data into Harvest Profit but they notice that not all of the data is getting pulled into our software.
- Frustrated, they contact our support team and ask for help.
- We need to hop on a screen share to view their agronomy tool and notice that they have a field in it named “South ¼” and they’ve named that same field “South Quarter” in Harvest Profit.
This conflict in data was shown to them during the integration setup process but they looked it over when setting up the integration.
Given the potential for data inconsistency, we need to be very thoughtful in how we build out these integrations. Having many integrations combined with a lack of industry-standard data structures across all areas of a farm definitely has the potential to make Harvest Profit more fragile.
In addition to this, our customers are requesting more and more integrations.
Many of them make sense on the face of it but when you dig into what they are trying to accomplish, it becomes clear that differences in data structures make their dream deliverable nearly impossible without a lot of work on their end to make sure the data “maps” correctly from system-to-system.
So we are facing a bit of a conundrum when it comes to integration. Users want them and they definitely have given us a tailwind when it comes to new customer acquisition. If we aren’t thoughtful with how they are implemented, they are surely to decrease customer retention and happiness.
It’s our job to filter through customer feature requests thinking further ahead than customers might be doing in the short-term. Feature prioritization is one of the hardest aspects of running a software business and it’s something that I didn’t know when I got started on this journey.
If you’ve used a software product and thought, “Wow, this tool is way too complicated,” it’s highly likely it didn’t start that way. Oftentimes, more functionality isn’t better!
On another note, I just offered our software developer intern a full-time job starting in the summer of 2020. Continuous growth in headcount will never be a priority for me and the company but our customers have entrusted us with their time and money. We’re working hard at continuously adding more value to the product and our support of the product.
Sometimes, slow and steady wins the race!
One of the biggest challenges for me personally as the majority owner of Harvest Profit will be the balancing act of optimizing our business for growth vs. profitability. I don’t think it’s an either/or decision but there are definitely trade-offs made when leaning one way or the other. There are convincing arguments to be made on both fronts.
I don’t have the “right” answer and this will be a big challenge. I definitely think we can grow from our current customer base of 500 to 10,000+ but building an IPO-scale business just isn’t a realistic goal for our team. Regardless, I’m pumped about our potential and the work I get to do with a great set up customers and teammates.
After two consecutive months of year-over-year sales declines in May and June, I estimate that our overall sales from July through October will be up over 150% from 2018. October is looking like it could be a 300%+ increase in revenue year-over-year.
We’ve added 150+ net new customers this year with our prime sales window starting in December ahead of us.
And finally, over the next month I have a couple meetings set up to discuss substantial partnerships with large ag industry participants. As I mentioned earlier this year, we had preliminary merger discussions with another company. We’ve had a few more conversations on that topic and we’d both need to ensure that it’s a good fit for our customers.
There’s likely to be some great opportunities for us to reach more farmers in 2020 and beyond. We’re excited to keep making it easier for our customers to win the battle against uncertainty on the farm!
Thank you for following along on our journey this year!
Grades For September
- Employee Engagement: C It’s been a “heads down” month for most of our team. As you’ve noticed, I didn’t show much improvement on this front so far this year. And if that doesn’t happen over nine months, another course of action is likely necessary. I’m currently thinking of trying to bring on a part-time COO advisor who can work with us a day or two a week to help with these kind of activities.
- Sales Activity: A Another good month for us. Leading indicators (web traffic, free trial signups, sales inquiries, etc) look positive for this trend continuing.
- Systems: AWe are starting to map our processes in Playbook. This will be a great tool for us to leverage in the future (and potentially sell as a standalone product).
- Content: AWe built out a set of five blog posts that we are going to soon launch. We may wrap them into a whitepaper and then post it as a free resource. We are also starting to build out a free resources portal that we will point traffic to.
- Data: A Once again, we are continuing our work on a data initiative that will be ongoing over the months that should really help our data insights.
- Fun: AWe are getting together again soon for some team building and planning. All-in-all, we continue to push out valuable updates to the software and that’s always great for morale.
- Work/Life Balance: Uncertain My travel schedule is going to ramp up over the next month and that always pulls at my work/life balance but I’m looking forward to getting out and spreading the word on how we can help farmers and other ag industry participants. My Dad is 99% recovered from his accident so we are fortunate for that. On another note, my wife and I found out a couple months ago that she is pregnant with twins and they’re due in January. (Twins… AH!) Life is going to get a lot more hectic but in a great way!